Kind of contract did Lulene and Ellen have

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What kind of contract did Lulene and Ellen have? What kinds of issues may arise with their contract?

Lulene makes the best lemon meringue pies in Mississippi. So Ellen, who owns Ellen’s Old Fashion Cafe, had a verbal contract with Lulene to buy 50 pies per week at the price of $5.00 per pie. Lulene said: “I will supply you with lemon meringue pies for however long you want them at $5.00 per pie.” Ellen said: “That’s great, I’ll take them.” Both women were pleased.

Soon Lulene had a problem. Between a hurricane in Florida and brush fires in California, the price of lemons increased by 200 percent. Now, instead of the $5.00 per pie price she intended to charge Ellen, she feels she must charge $7.00 per pie to make a little profit.

Lulene calls Ellen with the bad news and Ellen has a fit. She tells Lulene that the deal is off. Lulene says, “That’s what you think!” and goes to see Amanda, her attorney.

Questions that are to be addressed:

  1. What kind of contract did Lulene and Ellen have? What kinds of issues may arise with their contract?
  2. Suppose the Mississippi legislature passes a law, one day after Lulene and Ellen make their contract, that the sale of lemon pies is prohibited in the state because lemons have been found to cause cancer. How would that affect the contract?
  3. Assume that when Lulene and Ellen entered into the agreement Ellen was an enterprising 16-year-old. Would the contract be enforceable? Why or why not?
  4. Instead of meeting to discuss the deal, Lulene had sent Ellen a letter offering to sell her lemon pies for $5.00 per pie for as long as Ellen likes. Lulene says she must receive Ellen’s answer by May 10. On May 8 Ellen signs a letter accepting the offer and mails it. On May 9 Lulene calls to withdraw her offer. Ellen says it’s too late, she has accepted. Who wins and why?
  5. Assume that Ellen doesn’t call the deal off when she is told the price is now $7.00, but wants to hold Lulene to the deal to supply pies at $5.00. If Lulene fails to supply the pies, and if Ellen then sues her for a breach of contract, what is Lulene most likely to argue to avoid liability?
  6. Draft a contract between Lulene and Ellen based on the original agreement using legal principles from the text and other sources. Make it as specific as possible, use assumptions of time limits and so on. Attach it as an addendum.
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